Affinity Health Plan, Inc., a managed care plan, filed a breach report with the U.S. Department of Health and Human Services (?Ç£HHS?Ç¥) after discovering that it had returned leased photocopiers to the leasing agents without first erasing the electronic protected health information (?Ç£EPHI?Ç¥) that was stored on the copiers?ÇÖ hard drives.?á The breach was estimated to have affected 344,579 individuals.?á HHS investigated the breach and concluded that Affinity had (1) impermissibly disclosed EPHI, (2) failed to perform a risk assessment of storing EPHI on the hard drives, and (3) failed to implement policies for the disposal of EPHI on the hard drives.?á Affinity entered into a settlement agreement with HHS, providing for a $1.2 million payment and a corrective action plan requiring Affinity to use best efforts to retrieve the hard drives and to take other measures to safeguard EPHI.?á A link to the HHS website discussing the settlement is… Continue Reading
The Internal Revenue Service (?Ç£IRS?Ç¥)?árecently launched a new website to explain tax provisions under the Affordable Care Act (?Ç£ACA?Ç¥) that are in effect now and those that will go into effect in 2014 and beyond. ?áThe website?ÇÖs home page is divided into three sections that explain the various tax benefits and responsibilities for (1) individuals and families, (2) employers, and (3) other organizations, such as insurers and tax exempt organizations.?á Topics covered include, among other things, premium tax credits for individuals as well as new benefits and responsibilities for employers. ?áThe IRS also released an online flyer to help individuals locate ACA resources available through other government organizations. The IRS?ÇÖs new ACA website is available?áhere.?á The online flyer is available here.
A multiemployer pension plan assessed withdrawal liability against an employer after it ceased participating in the plan. The employer made just one withdrawal liability payment and then initiated arbitration to challenge the assessment. A federal district court recently ruled that ERISA?ÇÖs ?Ç£pay now, dispute later?Ç¥ statutory withdrawal liability rules plainly required the employer to continue making payments, even while the arbitration was pending. The court refused to apply an equitable exception adopted in the 5th and 7th Circuit Courts of Appeal, which excuses withdrawal liability payments while an employer challenges its liability if the employer can show (i) severe undue hardship and (ii) the withdrawal liability claim is frivolous, because the exception had not been adopted in its circuit, the 3rd Circuit; the employer could not show the claim was frivolous; and the 3rd Circuit has said undue hardship alone is not grounds to support any such exception. Nat?ÇÖl Integrated… Continue Reading
A set of Frequently Asked Questions (?Ç£FAQs?Ç¥) posted on the U.S. Department of Labor?ÇÖs website describes a safe harbor provided under the Affordable Care Act (the ?Ç£Act?Ç¥) regarding compliance with the Act?ÇÖs annual limit on out-of-pocket maximums (?Ç£OOPMs?Ç¥).?á Under the Act, an OOPM under a non-grandfathered group health plan must (i) be applied on an overall basis to essential health benefits under the plan, and (ii) not exceed the Act?ÇÖs dollar limit, starting with the first plan year beginning on or after January 1, 2014. The safe harbor provides, for the 2014 plan year only, that if multiple service providers administer the benefits which are subject to the OOPM, the plan will be deemed to comply with the Act?ÇÖs limit if (a) the major medical coverage under the plan complies with the Act?ÇÖs limit, and (b) to the extent there is already an OOPM on the other coverage, the OOPM… Continue Reading
A federal district court recently overruled a self-funded, group health plan?ÇÖs denial of benefits for a procedure that the plan determined to be ?Ç£experimental,?Ç¥ and thus not covered by the plan.?á The court reviewed the plan?ÇÖs benefit determination de novo, rather than applying the deferential standard of review that is available under ERISA, because the plan administrator, which had discretionary authority under the plan to interpret its terms, did not expressly delegate its discretionary authority to the employer?ÇÖs Benefits Appeal Committee that conducted the final claim review.?á Accordingly, the court gave no deference to the plan?ÇÖs final benefit determination, reviewed additional evidence related to the procedure in question that had not been considered by the committee, and concluded that the procedure was covered under the plan. Dubaich v. Conn. Gen. Life. Ins. Co., 2:11-cv-10570-DMG-AJW (C.D. Cal. July 31, 2013).
It has come to our attention that a significant number of plan sponsors have recently received notices from the IRS that erroneously assess a penalty for filing a late or incomplete IRS Form 8955-SSA (Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits). We understand the IRS intends to inform those employers, within the next several weeks, that they can ignore the notices.
Earlier this year, the Federal Financial Institutions Examination Council (FFIEC) issued a notice for comment on proposed social media guidelines to financial institutions. While it remains unclear when the final supervisory guidance will issue, financial institutions would be shrewd to take certain steps. First, financial institutions should build the issues raised in the draft guidance into their risk assessment processes and enterprise-wide compliance management programs when using social media to communicate with customers. Second, the boards of directors of financial institutions also must ensure that qualified management is in place to monitor changes in both an institution?ÇÖs social media delivery channels and content thereon. In January 2013, the FFIEC issued the ?Ç£Social Media: Consumer Compliance Risk Management Guidance?Ç¥ (?Ç£the Guidance?Ç¥) specifically to banks, savings associations, and credit unions, as well as to nonbank entities supervised by the Consumer Financial Protection Bureau. The Guidance does not impose additional obligations, but rather… Continue Reading
Seventh Circuit Holds that ERISA Fiduciary Breach Claims under Defined Contribution Plan May Be Brought as Class Action
Participants in a 401(k) plan filed a class action suit in federal district court claiming that their employer breached its ERISA fiduciary duty to the plan relating to the plan?ÇÖs investments. Ultimately, the U.S. Court of Appeals for the Seventh Circuit held that an action for breach of fiduciary duty under ERISA Section 502(a)(2) may be maintained as a class action. Abbott v. Lockheed Martin Corp., No. 12-3736 (7th Cir. Aug. 7, 2013).
On August 5, 2013, the Centers for Medicare and Medicaid Services (?Ç£CMS?Ç¥) issued a set of frequently asked questions (?Ç£FAQs?Ç¥) which address the process that health insurance exchanges established under the Affordable Care Act will take to verify an individual?ÇÖs income eligibility for government assistance when purchasing health coverage through an exchange. Income verification sources include the IRS, the Social Security Administration, and the credit reporting agency Equifax. The FAQs follow the earlier release by CMS of final regulations on exchange eligibility determinations which indicated that, for 2014, the exchanges would not be required to verify income in certain circumstances, but instead could rely on verification performed on a ?Ç£statistically significant sample?Ç¥ of applicants. A copy of the FAQs is available?áhere.
The Department of Labor (DOL) issued Field Assistance Bulletin 2013-02, which provides temporary enforcement relief with respect to the deadline for plan administrators of participant-directed individual account plans (e.g., 401(k) plans) to distribute the comparative chart of investment options. ?áIn general, the initial disclosure was due no later than August 30, 2012, with succeeding annual disclosures due no later than the one-year anniversary of the initial disclosure. ?áUnder the new guidance, plan administrators may reset the deadline one time, for either the 2013 or 2014 comparative chart, if (i) the plan fiduciary determines that doing so will benefit the plan?ÇÖs participants and beneficiaries, and (ii) no more than 18 months pass before the participants receive their next comparative chart. A copy of the guidance is available here.